Is the market overestimating the GLP‑1(Ozempic etc) risk to ResMed (RMD.AX)?
I've been trying to quantify the actual risk of GLP‑1 drugs (Wegovy, Ozempic, Zepbound, etc.) to ResMed instead of relying on the common narrative that weight loss drugs will permanently destroy CPAP demand.
Starting from estimated GLP‑1 users, OSA prevalence, ResMed's market share, and OSA improvement data, I arrived at a theoretical 3.4m-4.3m at risk ResMed patient pool. Converting that into economics implied an annual earnings impact of roughly A$243m-A$308m, or about 12%-15% of earnings under a fairly aggressive assumption that affected patients stop generating value for RMD.
The next surprise came from GLP‑1 adoption data. Prescription growth has been enormous, rising from 1,884 per 100,000 adults in 2021 to 8,819 per 100,000 adults in 2026, which works out to roughly 36.1% CAGR. However, a large study also found that 64.8% of non diabetic users discontinue within one year and 36.3% of discontinuers later restart treatment. After adjusting for discontinuation and reinitiation, I estimated an effective GLP‑1 pressure growth rate of roughly 14.9% annually.
What makes this interesting is that ResMed's historical growth has been remarkably similar. Shareholders' equity grew from approximately US$1.7B in FY2016 to US$6.0B in FY2025, implying about 15% annual growth. Book value per share compounded at around 14.4% annually over the same period. Free cash flow and owner earnings growth have also been in the mid teens range historically.
I then built two scenarios: an evidence based case using the 14.9% GLP‑1 pressure growth rate, and a more aggressive bear case assuming 30% GLP‑1 pressure growth for a decade.
# Equity Growth Outcomes
|Scenario|Equity CAGR|Year 10 Equity|
|:-|:-|:-|
|No GLP‑1 Impact|15.0%|US$24.3B|
|Evidence-Based Case (14.9% pressure growth)|13.3%|US$20.8B|
|Bear Case (30% pressure growth)|9.6%|US$15.0B|
# Owner Earnings / FCF Outcomes
|Scenario|CAGR|
|:-|:-|
|Historical Growth Assumption|16.5%|
|Evidence-Based Case (14.9% pressure growth)|\~16.0%|
|Bear Case (30% pressure growth)|12.7%-13.7%|
What surprised me was that even under the aggressive bear case, the model still produces roughly 10% equity growth and 13% owner earnings growth over the next decade. Under the evidence based case, the impact is even smaller. Equity growth slows from roughly 15% to 13.3%, while owner earnings growth only falls from 16.5% to around 16%.
My takeaway is that the debate shouldn't be whether GLP‑1s affect ResMed. They probably do. The more important question is whether GLP‑1-related disruption can compound faster than ResMed's ability to grow earnings, free cash flow, and equity. Based on the numbers above, the evidence-based scenario looks much less damaging than the market narrative suggests, while the aggressive bear case still results in a business that compounds at respectable rates.
Interested to hear where people think the flaw is in this approach, especially around the overlap assumptions, discontinuation rates, and long term GLP‑1 adoption curve.